Auctions are fun and often fast-paced as you have bids coming in from multiple parties, and it’s easy to get carried away. You sit down with a set budget in mind, and suddenly it’s out the window as you get sucked into the action—now, you’ve accidentally overbid but won the auction lot.
Hopefully, you haven’t spent more than the lot’s resale value. If you have, you’re dealing with a profit loss. Evaluating auction lots for profitability in liquidations is an effective way to ensure you’re not overspending. The only issue is how do you know how much a lot is worth.
To help better guide and inform you, here are some helpful tips to help ensure you never pay more than you should for an auction lot.
Who’s the Supplier?
Finding out who the supplier is should be fairly easy, as most online liquidation auctions list the supplier on the product page. The auction sites typically group products from the same supplier together to make it even easier.
Why does the supplier matter? The simple answer is product quality. Even though you’re paying well below market prices, you don’t want to end up with inferior products.
Shop Around for the Best Deals
You know what you’re bidding on in an auction, but remember, this isn’t like buying an Amazon return pallet. Instead of being surprised by the lot’s contents, you know precisely what you’re getting.
Even though you know what the lot contains and its average resale value, you still want to compare prices. Auctions have minimum bid amounts, which is the lowest price you can offer for the lot. You can’t bid lower than the predetermined minimum amount.
Check Product Demand
Even if you get a great deal, it won’t matter if consumer demand is low, which basically means consumers aren’t interested in the items contained in your auction lot. Now, you’re sitting on a lot of unsellable goods. Even if you paid around 10% of market value, you’re still taking a loss.
So, how can you check product demand? You can take advantage of several online tools. Google Trends is a great place to start. You can easily search market trends by product category or niche.
Don’t forget about social media sites; they’re also a great source of information. You can join online forums, browse customer feedback, and read comments from other online sellers.
Start with a Small Lot
Okay, this isn’t always possible, but if you can, try to start with only a few new items. If the auction lot contains some of your best sellers, then, by all means, go big. However, if the items are new to your regular inventory, a market test is often best.
Don’t Ignore Your Budget
Auctions are exciting, and it’s easy to get caught up in the action. However, this is almost always a mistake. You may end up overpaying for a lot or get stuck with inventory you can’t move.
Along with trying to stay calm, have a set budget and stick with it. Don’t make excuses for going over budget; this is never good business sense.
Pay Attention to Consumer Feedback
Part of being a reseller is keeping your customers happy and satisfied. Chances are, you’re at least halfway there with your low prices. You also want to pay attention to the comments regarding your inventory since you can easily learn what your customers love and hate about your selections.
Have Fun Without Going Overboard
Enjoying an auction can be exciting and profitable, but it’s important to remember the true value of the lots you’re interested in. Adhering to a predetermined budget and conducting prior research on each lot will equip you with a clearer understanding of its worth.
This type of informed approach helps make sensible bids and increases your chances of making a profit, turning the auction experience into a successful venture.
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